News split proposal raises governance questions

The proposal to split Rupert Murdoch’s News Corporation could lead to renewed calls for reform of the company’s governance, which is dominated by the Murdoch family thanks to a non-voting share structure.

The family controls just under 40 per cent of the voting shares in the company, which confirmed on Tuesday that it is considering restructuring to separate its fast-growing television and film divisions from its newspaper and book publishing assets by the end of the week. But these shares represent a minority of the total capital.

Julie Tanner, assistant director of socially responsible investment at New York based Christian Brothers Investment Services, said investors would need to know that the boards of the new companies would be led by a qualified independent chair and include a substantial majority of independent directors.

“This is an opportunity for News Corp to get this right and create a governance structure that would benefit all shareholders," Ms Tanner said.

“This is also an opportunity to eliminate the dual class structure and allow all News Corp shareholders equal voting rights. The last thing investors want to see are the same low standards of corporate governance currently on display at News Corp."

In April, Christian Brothers Investment Services filed a resolution to be voted on at News Corp’s annual shareholder, expected to be held in October 2012, asking the board to appoint an independent chairman.